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AB 2618 – Changes to Local Agencies’ Investment of Surplus Funds

CATEGORY: Client Update for Public Agencies, Fire Watch, Law Enforcement Briefing Room
CLIENT TYPE: Public Employers, Public Safety
DATE: Oct 23, 2024

The Government Code allows a county, city, city and county, including a chartered city or county, school district, community college district, public district, county board of education, county superintendent of schools, or any public or municipal corporation ( Local Agency’) that has the legal authority to invest funds, at its discretion, to invest a portion of its surplus funds in deposits at a commercial bank, savings bank, savings and loan association, or credit union that uses a private sector entity that assists in the placement of deposits, provided that the conditions specified in the statute are met. The Local Agency’s investment deposits are subject to the limitations as outlined in Government Code section 53638. Further, a Local Agency is prohibited from placing investment deposits that exceed fifty percent (50%) of the Local Agency’s funds that may be so invested. On January 1, 2026, that deposit limitation was set to be reduced to thirty percent (30%) of the agency’s funds that may be so invested.

Assembly Bill 2618 extends the date the deposit limit will be reduced. Local Agencies will continue to be prohibited from placing investment deposits that exceed fifty percent (50%) of the Local Agency’s funds that may be so invested. On January 1, 2031, that deposit limitation will be reduced to thirty percent (30%) of the agency’s funds that may be so invested.

(AB 2618 amends section 53601.8 of the Government Code)

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